FHRAI has requested for a 6-month GST holiday from the state and central government as hotels see a cancellation rate of over 90%.

COVID-19 Hotel and restaurant association writes to PM Modi seeking reliefImage: Frederick Noronha via Wikimedia Commons (CC BY 4.0)
Coronavirus Coronavirus Thursday, March 19, 2020 - 19:09

The hospitality sector is another industry that has been severely hit due to the coronavirus pandemic. According to the Federation of Hotel and Restaurant Associations of India (FHRAI), the sector is seeing 90% cancellations of hotel bookings. In this backdrop, the FHRAI has written to PM Narendra Modi requesting government intervention to cushion the blow.

Similar to the requests of the tourism sector, FHRAI too has requested for a 6-month GST holiday from the state and central government.

The FHRAI says that adhering to timely payment of EMIs or the re-payment of loans during such a situation is an onerous task and has hence requested that the government intervene and offer the sector a stimulus so it can get back on its feet.

“Almost all tourism verticals have been severely impacted by the crisis, however, it is hospitality industry that has been hit the most. Our members have reported cancellations reaching a critical stage of 90%. Forward bookings, which may have helped buffer the impact, too is negligible because of the uncertainty in containing the disease spread globally. The Meetings, Incentives, Conferences and Events (MICE), wedding tourism, and other kinds of celebrations have been negatively impacted. Hotels and restaurants are facing a catastrophic situation with revenues plunging drastically,” Gurbaxish Singh Kohli, Vice President, FHRAI said.

In their letter to Modi, the association has also asked for fiscal statutory compliance deadlines such as payment of direct and indirect taxes to be deferred.

It also wants bank interest rate to be reduced by around 200 basis points with immediate full transmission for working capital. It has also requested for relief from electricity bills in the form of waiver or subsidy of FAC charges, and electricity duty.

FHRAI claims that the hospitality industry is highly labour intensive and is the biggest employment generator of both direct and indirect jobs. It is also one of the few industries that is capital intensive requiring a big chunk of it reserved as working capital.

“The industry employs the largest workforce and hoteliers have a responsibility towards taking care of their employees. This includes ensuring that they are paid on time as well as their well-being, especially now in the face of the pandemic. In addition to this, the working capital is draining rapidly which is hit by almost 90 per cent for both larger establishments and budget hotels and restaurants. Paying taxes including advance tax and GST is now straining the liquidity and is making it extremely difficult to manage day to day operations,” Pradeep Shetty, Jt. Honorary Secretary, FHRAI said in a statement.  

 

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